Global capacity utilsation falls for 3rd month

ACC OR% Dec12.pngCapacity utilisation continues to be on a downward path, according to the latest data from the American Chemistry Council. As their chart above shows, there has been no improvement since the summer:

• October should see peak rates, as companies catch up after the summer break and rush to complete orders before Christmas
• Instead, global capacity utilisation fell for the 3rd month in a row, and was at 86.1% versus 86.9% in 2011
• Worryingly, even N American regional production was slightly negative, down 0.1%, despite the shale gas advantage
• Overall capacity utilisation thus remains well below the long-term average of 91.2%

The chart also confirms that utilisation rates peaked back in Q2 2011, when the blog launched its IeC Downturn Monitor. This marked the moment when companies began destocking, after the oil price had peaked.

Since then, it has become more and more apparent that consumers are increasingly short of cash, due to today’s record oil prices. As a result, they cannot afford the discretionary spending that drives chemical industry sales.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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